These days, it seems like everyone — TV pundits, wannabe presidential candidates and even the guy next door — has something to say about how bad the economy is getting.

For some boat buyers, however, the present economic conditions have a silver lining. Now could be one of the best times in years to find great deals on new 2008 and even leftover 2007 models sitting in dealer showrooms.

To say that boat dealers are eager to get rid of their inventory is an understatement. In November 2007 alone, at the lead-up to the winter boat show season when traditionally almost half of new boats are purchased, sales of fiberglass boats were 20% lower than the previous year, according to industry analysts.

Boat sales for all of 2007 are expected to be 10% lower than in 2006. Brunswick, owner of Bayliner and Sea Ray boats among others, announced that, in terms of unit sales, it was their weakest year since 1965. And in 2006, sales were 5% lower than 2005.

Deals on boat loans may also be possible. As this issue of BoatU.S. Magazine went to press, the Federal Reserve had just cut interest rates to stimulate consumer spending. While there is some question about whether this move will really benefit the economy because it can lead to inflation, there is no doubt that it presents short-term benefits for anyone who can afford to take on some additional debt.

The used boat market for several years now has been favoring both current owners who want to upgrade and novices hoping to enter the field. Used boats accounted for 72% of all vessels sold in 2006. Again, analysts are predicting this trend will continue. Why is this perfect economic storm hitting the marine industry?

Well, a recession is looming, troubled housing and credit markets are sapping consumer buying power and the cost of the petroleum products used to build and propel fiberglass boats has skyrocketed in the past year. How the industry weathers the storm and how well boat owners keep the faith could affect boating for years to come.

A recession is defined as six months of reduced or constricted economic activity. Many economists predict that the nation as a whole is headed for recession in 2008, but the marine industry has been slogging through its own private recession for the past year. There is little indication that things will change anytime soon.

Headlines in the boating press during 2007 reflected the grim reality: “Boat Repossessions on Rise in the Rust Belt,” “Flat Is The New Up,” “Anxious Industry Hopes for Strong Lauderdale Show,” “2006 Fuel-Price Spiral Left Its Scars on Industry.”

Signs of growing turbulence were common throughout 2007. Some boatbuilders — even major players like Brunswick and Genmar — laid off workers because declines in boat sales reduced the demand for new product. Manufacturing plants were closed or moved to areas — sometimes outside the U.S. — where labor rates and the cost of doing business were lower.

As if that’s not enough bad news, Bank of America Securities analysts weighed in last fall with, “Factors such as the housing slowdown, increased incidents of mortgage defaults, growth in the used boat market and low consumer sentiment are affecting the overall marine industry.

“The current expectation in 2007 for industry boat retail sales is roughly 260,000 units, which is below the lowest level of 277,000 units in the early 1990s, and 11% less than the 296,000 units sold in 2003, the last trough year,” Bank of America reported.

According to statistics published by the National Marine Manufacturers Association (NMMA), the industry typically operates in a five-year cycle of three “up” years and two “down” years. However, the most recent cycle was three down years and two up years. A bit of marine industry history helps to put the present situation in perspective.

The last major recession to hit the marine industry occurred in the late 1980s and lasted through the early 1990s. At the time, the industry looked very different, populated as it was by conglomerates Brunswick, Genmar, Tracker Marine and Outboard Marine Corporation (OMC). Many small, independently owned boatbuilders filed for bankruptcy. Other small independents, like Cobalt, Grady-White and Catalina Yachts, rode out the bad times through a combination of consistent product quality and creative responses to dealer and consumer needs.

As the recession waned, Brunswick, Genmar and OMC strengthened by buying up boat makes so their product lines cover the gamut of low, middle and luxury fishing boats, runabouts and cruisers. Rather than trying to perfect the niche market, the thinking was that the conglomerates could offer something to appeal to every boat buyer.

OMC went bankrupt and disappeared from the scene in 2000, but Genmar and Brunswick, along with Tracker, remain dominant. A few smaller conglomerates have formed: American Marine Holding (Donzi and Pro-Line), Luhrs Marine Group (Luhrs, Hunter, Mainship and Silverton) among them. In addition, many independent builders have allied into buying groups to take advantage of the kinds of discounts available only to the likes of Brunswick.

So, is the industry healthier going into this latest recession? Lessons learned the hard way during the early 1990s recession include the importance of diversity in product lines, consolidation of physical plants and cost-cutting measures like group purchasing power and even overseas production. American builders are also exporting more boats than ever before, a trend that will probably continue as the dollar weakens against foreign currency.

Along the way, the marine industry in general has revamped its customer service philosophy as a way to build loyalty and a repeat customer base.

Positive change is most evident where consumers experience the lion’s share of their contact with the industry: at the retail level with their local boat dealerships and repair yards. Intense effort has been made to give customers what they want and this largely mirrors what they’ve come to expect from auto dealerships: stem to stern service.

NMMA has responded by creating a dealer certification program and many forward-thinking dealers are using successful customer service models based on how auto dealers do business. Multi-site organizations like Westrec-owned marinas, which are found worldwide, Marine Max, with 85 locations throughout the U.S., and Passport Marine, with 10 locations along the East Coast, cover every aspect of boat ownership, from financing to one-on-one training, storage, repair and boat transport.

Consumers are, of course, being hit by the same economic hardships faced by the industry. But, one segment that may not be feeling the pinch are baby boomers whose kids are grown and whose mortgages are all but paid off. That second home or a larger boat may be within reach. For these folks, this could be the year to sail away.

(c) Copyright BoatU.S. Magazine, March 2008